RDA stay: ‘Ransom’ payments to state on hold

The California Supreme Court announced Friday it will decide whether the state can lawfully shutter redevelopment agencies if those agencies fail to issue large payments to the state.

The California Redevelopment Association has argued that the “ransom” payments are illegal under 2010’s Proposition 22, a constitutional amendment which explicitly prohibits “seizing, diverting, shifting, borrowing, transferring, suspending, or otherwise taking or interfering with” revenue dedicated to local government, including redevelopment dollars.

Revenue obtained from redevelopment agencies is a key part of the state’s 2011-2012 budget plan, which requires cities to pay $1.7 billion this year to retain their redevelopment agencies, plus an additional $400 million annually. The funding would be diverted to local public schools, in lieu of the state’s obligation.

Until the case is decided, the court has issued a stay which will postpone enforcement of most of the law. The stay, however, retains language from the law which disallows existing redevelopment agencies from incurring new debt, transferring assets, acquiring property, entering into new contracts, or modifying redevelopment plans.

The court established an expedited schedule, in hopes of reaching a decision prior to Jan. 15, 2012 – the date redevelopment agencies must make their first payment to the state, or dissolve.

The Turlock Redevelopment Agency faces a $3.2 million one-time payment to remain active – a payment which representatives say it cannot afford. The Turlock City Council on Tuesday agreed to appeal that amount as the state calculation is based on the higher-revenue 2008-2009 year, and does not consider the city’s 2011 bonds to pay for the Public Safety Facility.

If Turlock does not pay the one-time “ransom” payment, plus an additional approximately $450,000 per year, the state will force Turlock to shutter its RDA – should the Supreme Court not overturn the law.

Without a redevelopment agency, Turlock would likely have to abandon the planned Avena Bella affordable housing project, effectively throwing away the $1.2 million already spent on the project for land acquisition and pre-development. Two proposed “job-creating projects,” offering almost 300 jobs in total, may be halted as well, as the companies may not relocate to Turlock without RDA assistance.

Eliminating the RDA would also curtail or halt graffiti abatement and code enforcement activities, which are currently funded by RDA dollars. As many as seven city positions could be eliminated, and as much as $225,000 in costs could be shifted to Turlock’s cash-strapped general fund budget.